Sudden Stops are associated with increased volatility in relative prices. We introduce a model based on information acquisition to rationalize this increased volatility. An empirical analysis of the conditional variance of the wholesale price to consumer price ratio using panel ARCH techniques...

The emerging-market crises of the 1990s were characterized by crashes in exchange rates, credit flows, and output, and the currency crashes caused the other two. Because local banks and firms had large foreign-currency debts, the sharp depreciations of their countries' currencies had huge...

This paper provides a critical analysis of Kaminsky and Reinhart (1999) (KR), perhaps the most prominent empirical paper on causes of currency crises. After dealing with problems present in this paper, it proposes an aggregate leading indicator of crisis. The proposed indicator performs better...

This paper analyzes the relevance of external factors in average quarterly GDP growth for 1990-2006 in the seven largest Latin American countries (LAC7). Modeling the relationship between LAC7 GDP and several external factors, it is found that those factors account for a significant share of...

This paper argues that developing countries have limited arsenal at the national level to manage financial instability. The solutions have to be sought mainly at the multilateral level and these include: provision of adequate international liquidity at appropriate terms for current account...

The global financial crisis posed as much of a challenge for the foreign exchange reserve policies of emerging countries as it did for their economic policies and financial systems. This pushed many countries into rethinking their strategies about foreign exchange reserves. This study presents...

The authors find evidence supporting the hypothesis that countries at times misreport their eco-nomic data in a strategic manner. Among those suspected are countries with xed exchange rate regimes, high negative net foreign asset positions or negative current account balances, which corroborates...

We find evidence supporting the hypothesis that countries at times misreport their economic data in a strategic manner. Among those suspected are countries with fixed exchange rate regimes, high negative net foreign asset positions or negative current account balances, which corroborates the...